Copyriglit 191(5, by Win. Frank Glenn 



IllillllHI 



\\\m\ 



C REAM 
ODUCERS 
UIDE 






WM. FRANK OLENN 
South Sioux City, . . . Nebraska 



fic5 




JUN 10 1916 

^CI.A434389 



INTRODUCTION. 

The character and standing of most men are 
known best a1 home. Malicious statements calculated 
to discredit the motives of others, usually bear a 
most searchinr^ scrutiny. In the absence of corobora- 
tive or contradictory evidence to the contrary, the 
reader may assume at least that fifteen years of 
actual participation in a given line of business, 
naturally qualify one to speak with authority. 

Individuals, business firms and bankers, of South 
Sioux City, Neb., will verify the writer's claim of 
integrity, qualification, character and standing. 

Wm. Frank Glenn. 



CREAM PRODUCERS' GUIDE. 

The contents of this gui(h^ is of special interest and 
great importance to cream producers. 

Should the inference be made that there-is notliing 

UiOi'e you migiit know with advantage to yourself, 

ijuch inference must Springs from selfish motives; no 

other procf is needed to convince the intelligent 

farmer that he should know all there is to know. 

If you have been led to believe that the Avhole 
irabject of buying, transporting, manufacturing and 

gelling of cream and butter was^ too complicated for 

the ordinary producer to understand, stop and 

reflect. 

You would hardly expect that those interested 
only in the pi'ofits would exj)lain in detail. 



8 

A thorough understanding of botli the buying and 
selling is not only desirable, but a positive necessity. 

You may already know in a meager Avay some- 
thing of sampling, grading, testing, and shipping, 
but here your information stops. 

Your ability to see clear through and around any 
private or business matter, is due to the knowledge 
you possess concerning the matter under considera- 
tion. 

You should know to a reasonable degree of 
certainty, not only the buying cost of cream, the cost 
of transportation and other expenses in connection 
with it up to the time it is delivered at the creamery, 
but there are many other things that are of extreme 
importance to you. 

The system under which you are selling your 



9 

cream rjhoiild be tliorouglily understood in all its 
details. 

Above all others you should post yourself on the 
following subjects, especially when your success or 
failure in the dairy business depends so much on 
knowing' them : 

The highest coniniissions paid for buying cream. 

The lowest commission paid for buying cream. 

The churn over run. 

The manufacturing cost of butter. 

The selling cost of butter. 

The relative cost of buying cream in your own 
state as compared with others. 

The variation in station prices paid. 

^he percentage of butterfat produced in the vari- 
ous months of the year. 



10 

The relation of shortage to station hiiyiiiy, r.-ul 
churn over run. 

The reason for the destruction of the local 
creamery. 

The unnecessary expense of the ordinary system of 

handling creaui. 

The birth of the centralized ereaiii(M*y. 
The buying practices. 

The unreasonable profits. 

The cause and effect of reducing buyers' com- 
missions. 

The manufacturers' profit. 

The buyers' net profit. 

The reason why centralized creameries get the 
business and profit, whether sold at the station 
or shipped direct. 



11 



The cold storage as a price leveler. 

A thorough study oi these pages wiii give yon a 
fairly accurate knowledge of the subjecta mentioned. 

Condensed illustrations of certain paragraphs con- 
tained herein, to which your attention is especially 
directed, will be found on pages -^ — to ' . 



12 

THE ORDINARY STATION SYSTEM— AN OUT- 
GROWTH OF PAST NECESSITY. 

1. The producers of cream, being interested 
mainly in the essential elements of the creamery 
business, as affecting them — therefore our remarks 
here will be brief and made with the sole object of 
being understood rather than bewilder the reader 
with nonessential matter. 

BIRTH OF THE CENTRALIZED CREAMERY. 

2. Reducing the manufacturing cost of butter, by 
churning it in large quantities was the primary and 
accepted object for the birth of the centralized 
creamery. Later developments, however, lead us to 
speculate on the real designs of the promoters. 



13 

CAUSE OF THE DESTRUCTION OF THE LOCAL 

CREAMERY. 

3. Cash bn3ung stations were established in the 
central western states some twenty years ago. Many 
of the local country creameries at that time found it 
profitable on account of fancy prices offered, to sell 
their cream to the centralized creameries instead of 
churning it. Later, on account of dissatisfaction in 
the matter of testing, and the reduction of prices, a 
few of them attempted to re-open for business, but 
by that time buying stations had been established in 
all territory surrounding them, as well as in their 
own town, making it difficult to operate a local 
creamery on a paying basis. It was no longer 

optional with him as to what the paying price should 
be for cream ; he was compelled to meet the station 
prices or close his creamery, which was done in many 
cases. 



14 



VARIATION IN STATION PRICES. 

4. In many instances tlie price set for tlie local 
ereamerymen exceeded the station i)riees paid at out- 
side points wliere there was no local creamery; there 
being two or more stations in his town by this time, 
one or the other of the buyers would for some un- 
known reason fail to receive instructions to lower or 
raise his paying price to correspond with the other, 
when a price war Avould be started immediately, 
lasting for days and possibly weeks, with the local 
ereamerymen perhai)s staking his last dollar in the 
attempt to protect his business from destruction. 



15 

UNNECESSARY EXPENSE. 

5. The word "lU'Ccssity " used in llic lioading of 
this eluiptc'i- ai)i)li(.'s to the ordinary station system of 
ereain bnying. Below is listed the station equipment 
and various items of expense necessary to success- 
fully carry on the business on this plan: ; 

Testing equipnu'ut. ,; :; 

Shipping cans. 

Check books. 

Report books. 

Acid for testing. 

Stationery. 

Oil for heating w^ater. 

Drayage on cream to depot. 

Banking arrangements. 

Transportation charge on cream. 

Drayage at destination. 



16 

Clerical expense at office. 
Coal for heating station. 
Lighting of station. 

Water rent. 

Guaranteed salaries at some stations. 

Koturning equipments from discontinued stations. 

Buyers' commission on butter fat. 

Telephone rentals. 
Postage stamps. 
Revenue stamps. 

Station rent. 

Advertising. 

Field superintendent's salary and expense. 

Loss on account of unreliable buyers. 

6. It will be shown later that many of these items 
of expense are wholly unnecessary even under the 
station system. 



17 



CHANGED CONDITIONS. 

7. In the betrinniii^, it is well to remember that 
the employmeut of superinteudents. or instructors 
in sampling and testing cream, arranging for station 
building, etc., had a proper place in the business. 
Conditions are reversed today as there are more 
buyers who fully understand the business in detail, 
than there are places to put them. 

8. Under this system each buyer must contribute 
to the salary and expense of field superintendents an 
item of .i>50 per year. If this should seem unreason- 
able to you. or l)e disputed by others, inqnire as to 
the numl)er of stations the one calling on your buyer 
oversees. It will be found not to exceed 54. Divide 
this number into $2,700. his salary and expenses, 
showing that the buyer's proportion is the amount 
named abov<\ The superintendent is no doubt a 
jolly good fellow and possibly the buyer feels that 
the money is well spent. He i)iay have been running 



18 

his pit'st'iit station for only eig'ht or ten years and 
f»'ols tlip ih'cpssity of an oxport to clieek up his 
accounts, yet ho would roscnt tlio insinuation tliat a 
ii:iiardian 1>t' appointed to handle his affairs. 

9. The custom in the past has ])ccm to fui-nish 
almost anythinji: that mii^ht he reipiired iji ordei* to 
estahlisli a station at any given point. The fact 
that thei'c are already several stations there has hut 
little heai'in*^ on the ease. 

10. Shouhl tht^ pi'ospective huyer I'efuse to acce{>t 

the proposition on a commission hasis, and he 

sccuhmI to have iuHuence in that community, he 

Avould he paid a ^uarante<'(l salai-y. a station ecjuij)- 

nu'iit would he ship])ed out to Inm. rent and other 

expense woidd he ari-anired foi'. when he would 

attempt to hny tlie cream then g'oing" to the other 
buyers. 



19 



Mistake of Overzealous Superintendent. 

11. His adaptability for the cream business may 
have been overestimated by the Held superintendent ; 
possibly llie butter fat bought during the first month 
would not exceed 200 pounds. The buying cost of 
this butter fat to the company would be 20 cents, in 
addition to the price of the fat. 

12. The buyer may give numerous excuses why 
lie bought so little cream and make great promises 
for the future. He is left there for another month 
on the same basis and with the same result, when he 
is finally replaced by one supposed to possess busi- 
ness getting qualities. Another two months' attempt 
to gain a foothold and the equipment is shipped back 
to the company to be sent out to some other point. 
Like throwing ^now balls against the side of a barn. 
Some of them stick. 



20 



:I3. The producer not giving this matter any par- 
ticular attention, may say this is the business of the 
company. Let them pay the bills. But, as you arc 
the main spoke in the wheel in producing the raw 
material, these methods affect the price received for 
yoi "^ cream. 

11. If you would attempt to conduct your own 
affairs in the same manner, paying $1.50 for a pound 
of steak when the regular price is 15 cents, $20 for 
a sack of flour when it may be bought for $2, or $G00 
for a wagon, the usual price of which is $60, you 
woidd immediately be considered incapable of look- 
ing after your own business^ Anyone knows you 
would go broke, and still you wonder why the other 
follow continues to prosper. 

15. Unreasonable and uncalled for prices for 
cream are sometimes paid over a large territory, the 
outward reason given that some company contracts 
with a buyer who formally bought for some other 



21 

company, who within the 30 day limit as set by cus- 
tom, g-entlemen's agreement, business courtesy, de 
cides to again go into the business of buying cream. 

16. Thousands of dollars have been squandered 
in the above manner, the producer benefiting greatly 
should he by chance be in tlie war zone. The excess 
price i)ai(l is often ten or more cents i)er i)ound on 
the butter fat, as shown by market quotations, and 
the prevailing prices paid in other states and 
localities. 

17. Either these vast amounts come from the 
profits of the business or the price paid to the pro- 
ducer. Just as there is calm after a storm, the 
general price falls after these price wars, even to a 
point lower than normal. 



22 

18. If these amounts come from the profits of the 
business, then we must .conclude jthat tfe^y . arie 
UNREASONABLY LARGE. If the price that J:he 
farmer receives for his cream is less than it should be 
(and as it surely is) he has a reftiedy that may e^kily 
be applied. •? . , . 

Volume the Only Redeeming Feature. 

19. To secure a large volume of cream, the cash 
station system is admitted superior to any other 
known method. In ■ this particular it may be con- 
sidered a success, but from the viewpoint of the pro- 
ducer it requires a great stretch of imagination to 
give it the stamp of approval. 

Reduction of Commissions. 

20. During the latter part of 1915 the centralized 
creameries operating in tlie central western states 
began reducing the buyers' connnissions, AS IF' BY 



23 

INSTRUCTIONS FROM ONE CENTRAL HEAD. 

During this roconstnietion or acljnstment of a buy- 
ing basis, buyers who attempted to contract witli 
other companies found there was nothing to be 
gained by a change, providing' they could do so. 

21. The guaranteed salary features of many com- 
mission contracts were discontinued, as were also 
the straight salary contracts in mostly all instances. 
Exceptions to this were made, however. 

22, Buyers' contracts today stipulate a commis- 
sion ranging from 1^2 cents per pound on the butter 
fat delivered at depot, to 2 cents per pound on the 
butter fat and all expense allowed. 



24 

23. It is seen that there is a difference of more 
than 1 cent per ponnd in the actual buying cost of the 
butter fat to the manufacturer in the flush summer 
montlis, as the overhead expense under the 2 cent 
contract will equal eight-tenths (8-10) of a cent 
in some eases, making this butter fat cost two and 
8-10 (2 8-lOc) cents, while in the slow months of 
winter it will run to three (8c) cents or more. 

24. As a cream pi'oducer the subject of salaries 
and commissions are of vital importance to you. 
Other features of the business connecting the chain 
of circumstances leading to, and being a vital part, 
are no less essential to a thorough understanding of 
the whole subject. 

25. The entire territory of one field superinten- 
dent figured recently, covering a period of one year, 



25 

v.'llii Iv.-enty-six v.'orkin^; days to the month and at 
ten hours a day, — it was found that the average wage 
received by all buyers was ten cents (10c) per hour, 
or one ($1.00) dollar per day, on the reduced com- 
mission basis, while on the former basis the figures 
show $1.30 per day. 



26 

ANALYSIS OF REDUCING BUYERS' COMMIS- 
SIONS. 

26. In connection with the justice of reducing 
buyers' commissions, or the necessity for so doing, 
when the facts bearing on the matter are considered, 
the average day laborer receives from 20c to 25c 
per hour. The former amount will serve your pur- 
pose for comparison. 

27. The buyers were told in the argument pre- 
sented as to why the commissions should be reduced ; 
that the cost of buying the cream had reached a 
point where it was no longer possible to meet the 
direct shipping' prices; that this was caused prin- 
cipally by the high commissions being paid to the 
buyers. 



27 

CAUSE AND EFFECT OF REDUCING BUYERS' 
COMMISSIONS. 

28. Analyzing the reason, one is brought to the 

conclusion that tiiere are too many hnyers ; that the 

reduced commissions make it impossible for all of 

them to remain in the business of buying cream. The 

burden of this most practical method of eliminating 

the amount of comi)etition fell on the buyers. No 
manufacturer intended to discontinue business at 

any of the points where he might be represented, yet 
all of them professed the positive necessity of com- 
pelling their buyer to handle the cream on the lower 
commission basis. Each expected the other manu- 
facturer's buyer to make so little that he would 
starve out (while his own buyer was being used to 
further the plan, and bring about the desired re- 



28 

suits). The process is certain (but the system em- 
ployed must be condemned). A clean cut division of 
territory would conflict with federal laws (it might 
be shown that there was a combination in restraint 
of trade). To avoid this, the buyers is put on the 
job. Being an obedient, trustworthy fellow, he uiay 
be counted on to do his best. 

29. A further analysis and consideration of the 
unnecessary expense found in the ordinary system 

of cream buying, is conclusive evidence that the 
buyers' commissions are of secondary consideration 
in comparison. A close inspection of the methods, 
and items of expense enumerated below is convincing 
evidence that the buyers' commissions are really a 
very small portion of the total. (Study the list care- 
fully). 



29 

Buyers' coniinissiou. 

Station rent. 
Coal for station. 

Lighting of station. 

Acid for testing. 

Postage stamps. 

Revenue stamps. 

Drayage on cream to depot. 

Transportation charge on cream. 

Investment in station equipment. 

Deterioration of station equipment. 



30 

Unnecessary Expense Found in the Ordinary Cash 
Station System. 

Telephone rentaL 

Superintendent's salaries and expense. 

Guaranteed salaries at some stations.. 

Straiglit salaries at other stations. 

Freight charges on station equipments in the 

spring, and their return in the fall. 
Report hooks. 
Check books. 
Order blanks. 
Commission blanks. 
Stationery. 

Two-thirds of clerical expense at office. 
Loss due to unreliable buyers, etc. 



31 

30. The list shown inidev tiie line, with the possi- 
ble exception of telephone rental, are unnecessary. 

31. The above, he may have been informed, 
brpught the buying cost to the prohibitive figure of 
about 5c per pound of butter fat, which was sub- 
stantially correct regardless of the number of pounds 
handled. 

32. In other woi'ds, when the price of butter fat 
is 20 cents per pound at the station, as it usually is 
in the liusli of summer months, more or less, the cost 
of buying and delivering it to the creamery, clerical 
expense included, is about one-fourth the price 
received by the farmer. 

33. You may now figure what portion of this 
buying cost the buyer receives as a commission, — 
whether he is to blame, or is it the fault of the system. 



32 

34. It would appear that some of tlie niorc 
economical buyers were able to bank the greater 
portion of the $1.30 they received under the old 
basis, hence the advisability of reducing it to $1.00. 

35. The value of butter fat is determined by five 
factors : The price paid for the butter fat in cream 
form ; buying ; transporting ; manufacturing, and 
selling cost. 



33 



CHURN OVER RUN. 

36. Some producers are quite familiar with the 
subject of churn over run ; a very large majority of 
them, however, know no moi-e about it than (h)es the 
average num of testing ereaiu or nuiking cheese. 

37. A few years ago there was no limit to tlie 
r.inount of moisture that might be put into butter. 
At that time the buttermaker who could inject the 
most moisture, and at the same time produce a suit- 
able grade of butter with the necessary firmness to 
stand up, was in demand. 

o8. The ingredients of butter are butter fat, 
casein, salt and water. With no limit to the amount 
of water that might be used, it was not uncommon 
for the churn over run to show 30% or 35%. 

39. Today the moisture in butter is regulated by 
Jaw and stipulates 16% as the maximum amount. It 



34 

is found necessary in order to comply strictly with 
thii law, to use slightly less than this; which with 
the other ingredients produces a churn over run of 
24% to 25%, depending of course on the accurate 
testing of the cream at the station, in so far as the 
maiuifacturer is concerned. 

40. For the purpose of calculation Ave will nse 
the lower figure of 24% as a reasonable churn over 
run. IMost manufacturers exceed this amount, which 
means that from each 100 pounds of butter fat there 
is 124 pounds of butter made. 



35 

BUYING COST OF BUTTERFAT. 

41. Tlic average buyers' commission will not ex- 
ceed 2Vl>c per pound on the butter fat bought, includ- 
ing all exi)ense of" the station and drayage, on the 
reduced commission basis. 

TRANSPORTATION COST OF BUTTER FAT. 

42. The average transportation charge does not 
exceed ly^ cents per pound on the butter fat. 

MANUFACTURING COST OF BUTTER. 

43. The manufacturing cost including all ex- 
pense, does not exceed %c per pound on the butter 
fat. 



36 
SELLING COST OF BUTTER. 

44. The average selling cost does not exceed i/oc 
per pound on the butter fat. 

"io. The above shows a total buying, transporting, 
mauufacturing and selling cost of SVi cents per 
pound on the butter fat. 

46. We believe in being liberal, both in practice 
and the consideration of any subject, nuiking ample 

allowance for variation in the price of material, 
additional cost of labor, etc., and an extra 1^4 cent 
per pound on the butter fat is allowed, making the 
total cost of all expense attached to the buying, 
manufacturing and selling of butter 5^/^ cents per 
pound. 



37 

PERCENTAGE OF BUTTER FAT PRODUCED IN 
THZ3 VARIOUS MONTHS OF THE YEAR. 

47. Iloro wo desire to eall your attention to the 
percentage of butter fat produced and bought in 
certain monthr; of the year, covering a period of six 
(6) years over a wide territory. 

48. SIXTY-FIVE PER CENT of the year's pro- 
duction of butter fat in tlie central western section of 
llic country is ])ro(luced during the months of May, 
June, July, August and September. 

49. FIFTEEN PER CENT is produced in the 
months of October, November and December. 

r)0. Twenty per cent is proiluced in the months of 
January, February, March and April. 

51. June, July, August and September, being the 
most important in relation to the station i)rices i)aid, 



38 

' f '■':•] ■ •\ i- ■■■>: 

there is 54% of the year's butter fat bought diirirfg 

« •, ■ >t-> 

these months. These percentages are affected to a 
certain extent by weather conditions, but the figures 
may be taken as substantially correct. 

52. We will assume that th(^ Elgin market or New 
York firsts, which are the ones ordinarily referred to, 
is quoted at 30 cents, and that the station i)rice is 26 
cents, or 4 cents under these markets. 

53. It will be found that the above fairly repre- 
sents the average station price during the months of 
June, July. Augxist and September, in relation to 
these markets. 

54. On the above basis 100 pounds of butter fat 
Avould cost .+26; to this add the church over run of 
24 pounds, making 124 pounds of butter. This butter 
sold at one cent uiuler the nuirkets, or 29 cents, has 
a value of .+35.96. 



39 

55. The difference in the cost price and the selling 
price, it will be seen, is $9.96. 

5G. We will now deduct the buying, transporting, 
manufacturing and selling cost, which is 5i/o cents 

per pound, or $5.50 per hundred, leaving a balance of 
$4.46. 

57, The station price you understand is not 

always 4 cents under the markets, it being 3 cents at 

times, especially when there is very little to be 

bought. Again, the price will be 5 cents under these 
markets at times, during the months of June, July, 
August and September. 

58. You will keep in mind that the churn over 
run is of much greater value when the paying price 
for butter fat and the selling price of butter is high. 



40 

59. On the basis of 100 pounds of butter fat 
bought, and the markets quoted at 35 cents, making 
tlie selling price 34c, the churn over run of 24 pounds 
has a value of $8.16, while if the selling price of but- 
tei- is 24 cents the churn over run is worth $5.76. 



41 



OEJ^ITIIALIZED CREAMERY GETS THE BUSI- 
NESS AND PROFIT, WHETHER SOLD AT 
THE STATION OR SHIPPED DIRECT. 

60. The volume of butter fat bought during the 
flush, or summer months, is affected but little by the 
station prices paid. The producer is very busy dur- 
ing]: that season of the year; he gives the matter but 
little attention, but sliould he do so, there is no 

alternative. Tlis cream must be sold and the paying 
prices are uniform. Under this condition, if the 
buyer is paid IV2 (^^'I'ts per pound on tlu' butter fat, 
a ten gallon can of cream nets liim 36 cents, figured 
at 24 pounds of butter fat to the can, or 48 cents, if 
he is paid a commission of 2 cents per pouud on the 
butter fat, provided, however, he has none of the 
station expense to pay. 



42 

Should the lower prices be the means of conii)elling 
a great many farmers to ship their cream direct, the 
bnyers' commission of course is less, but as some 
creameries operating on the station buying system, 
are interested in, or own direct shipping creameries, 
and quote direct prices at points where they operate 
stadons, (in his ease) they ^-et -^e 'iiiHiiies.s tnir-^'fl-ov 
with the proiit, whether it is sold at the stations or 
shipped direct. 

Yon are told of the great advantages of the 
station buying system, by the manager in charge of 
the plants operated on that plan, while the one 
having charge of the direct shipping plant bombards 
you with circular letters in the attempt to show why 
your ci'eam should be shipped direct to the creamery, 



43 



that the commission paid to the buyer would be 
saved, etc. 

Both of the gentlemen above mentioned, draw their 
salary froiii the same employer, which is equivalent 
to shipping to Jones, or Jones. 



44 

BUYERS' NET PROFIT. 

62. The example below show.s the buyers' income 
and net profit, from a station buying 30,000 ])ounds 
of butter fat per year, where the commission received 
is iy2 cents j)er pound on the butter fat and 15 cents 
per each 10 gallon can of cream shipped. 

6.3. The months of June, July, August and Sep- 
tember are figured separately in this example, when 
the station price will be found to be around 4 cents 
under the markets. 

64. FIFTY-FOUR PER CENT of the year's total 
butter fat is bought in the above four months, or 
16,200 pounds in this example. 



45 



65. Tile 1)ii.v('1''h coimuis.sioii on 16,200 

pounds is $243.00 

66. Tlie allowance of 15 cents per eai) is. . . 86.25 

Total commissions $329.25 

67. Buyer's Expense: 
The item of coal is omitted. 

Rent at $7 per month $ 28.00 

Oil for heating water 2.00 

Drayage on 575 cans, at 5 cents 33.75 

Postage on reports 1.33 

Revenue stamps .66 

Washing })owder " .66 

Total expense $ 66.-40 

Total connnissions $329.25 

Total expense 66.40 

Buyer's net profit for four months $262.85 



46 

68. FORTY-SIX PER CENT of the year's buttei- 
fat is bought in the months of October, November, 
December, January, February, March, April and 
May, an average of 51/2% per month. 

GO. In the month of May alone the production is 
11% and is considered one of the big months of the 
year, yet it is placed in the doubtful column in so far 
as the profits arc concerned, due to the uncertainty 
of the buying prices of butter fat at the stations. It 
may be said with some degree of certainty that the 
price paid for butterfat during the last half of JMay, 
correspond with June, July, August, and September, 
or 4c under the markets. 

70. These percentages show that a station buying 
30,000 pounds of butterfat per year, will buy an 



47 

average of 5% or 1,500 pounds per luontli IVoin 
October 1 to April 30. They show that the average 
monthly amount of butter fat bought from October 1 
to May 31 is 1,650 pounds, or 51/2%. 

The yearly income of a buyer having 30,000 pounds 

of butter fat on the above basis is $556.10 

His expense for the year may be figured at. . . 150.00 



Buyer's net income for year .$406.10 

On the station buying system the average butter 
fat bought at all stations is near 20,000 pounds, or 
one-third less than the above example, a yearly 
income of .$270.78. 



48 



MANUFACTURER'S PROFIT. 

On 1G,200 pounds of bntterfat, with the markets at 
2G cents, the station price 22 cents, and tlie buyer's 
coiiDTiission ly^ cents on tlie I)utterfat, and 15 cents 
per 10 gallon can drayage : 

Cost of butter fat ^8,564.00 

Buyer's commission 329.25 

Transportation cost 243.00 

iManufacturing cost 121.50 

Selling cost 81.00 

Total cost $4,338.75 

Butter fat bought, pounds 16,200 

CJiureh over run, pounds 3,888 

Total butter manufactured, pounds 20,088 

Butter sold at, per pound 25c 

Total value of butter $5,022.00 

Total cost of butter fat 4,3B<^.fl^ 

Balance $683.25 



49 



VARIATION IN BUTTER FAT— COST AT 
DIFFERENT STATIONS. 

72. Ill tlie various departments of government 
work tliere is a fixed commission or salary. Men 
qualified for these positions know in advance what 
to expect in the way of remuneration. There is no 
discrimination — whether he be a congressman, sena- 
tor, attorney general, postmaster of some large city, 
or one in a town of 200 inhabitants. 

73. Moulders in a foundary where piece work is 
the system in effect all receive a certain price for 
turning out a certain piece of work. 

74. The cream buyer must first secure a license, 
or in other words, qualify for the position. After 
doing so, is there any logical reason why he should 
not receive the same commission as other buyers 
buying for the same manufacturer? 

75. The commission and expense must be con- 
sidered in connection with the buying cost of the 
butter fat at any given point. 






50 



H'^HEBT COMMISSIONS PAID FOR BUYING 

CREAM. 

,'. . . ciiiaps Buyer No. 1 lias a coiiti-act whereby 
he i-?. paid 2 cents per pound on fhe butter fat, rent 

o*" s 10, drayage on his cream to the de})ot, postage oi>. 
his ■ cports, kerosem- for heating wattu*, and the coal 
for heating purposes. He may buy 3,500 pounds of 
l)utter fat per month in June and July. The cost of 
buying this butter fat is as follows: 

Buyer's commission $70.00 

Rent 10.00 

Drayage 7.50 

Postage on reports 50 

Kerosene 50 

Coal 3.50 

Total expense $92.00 

Average cost per pound, 2 6-1 Oc. 



51 



77. In contrjist, Huyci' N(>. 2 iiiny I'cHcivc 1 i/o 

(HMits per pomid on the l)utl('i' fat, and 15 cents \)vy 

call (lra\'a,uc. whh tlic same amount of l)iil1ci- fat 
bought. 

I buyer's commission $52.50 

I)ra\aii»' 21.75 



Total oxpcnsr tl<74.25 

AvoragT cost per pound, 2 1-lOe. 
78. Biiyei- No. 8 has a contract calling for 11/4 
" ocnts i)cr .pound on the butter fat and 5 cents dra.y- 
age. He also buys tlie same amount of butter fat.- 



1 - ' 



u . .,..■ 



52 

LOWEST COMMISSIONS PAID FOR BUYING 

CREAM. 

Buyer's commission $52.50 

Drayage 7.50 

Total expense • ' $60.00 

Average cost per pound, 1 7-lOc. 

79. It would appear that the actual yearly buying 
cost to the manufacturer would be the amount shown 

above, namely : Two and six-tenths cents per pound 

in the first example^ two and one-tenth cents in the 

second and one and seven-tenths cents in the third. 

That is not the case, however. 

80. In example No. 1 there is a fixed expense, 
such as rent, kerosene, and coal, whether there is 
3,500 pounds of butter fat bought in a month, or 



53 



1,500 as would be the case in winter montlis. The 

total expense of the lower amount would be $47.60 
and the cost per pound to the manufacturer 3 1-lOc 
against 2 6-lOc as shown in the example. 

81. In examples No. 2 and No. 3 the buying cost 
to the manufacturer remains stationery at 2 1-lOc 
and 1 7-lOc. 



54 

DISCRIMINATION IN STATION PRICES PAID 
IN ADJOINING STATES. 

Disc-riiHiiiatioii in station pi'iccs, ))etween adjoining 
states, is a general pi-aetice aniong centralized cream- 
eries, since state laws pievent the practice within 
states. The variation is often (8) cents per ponnd on 
the butter fat. Investigation always reveals. , th^ * , 
cause. An instance is here cited of a farmers" cream- 
ery being built at Fi-emoiit, Neb., at the beginning 
of 1916, which accounts foi- the station prices in 
Nebraska being from 1 to -^ cents higher than they 
liave been in Iowa and Soutli Dakota during the past 
two or three months, or during March, April and 
]May. Tlu' farmei's of Nebraska have benefited, and 
may j)ossibly continue to do so if their plant succeeds 
in weathering tlu' discrimination period, which it 
may do if business niethodsj arc; applied. 



55 



SHORTAGE AT STATION. 

82. So imieh lias been said and written on tlie 
subject of shortage, which is the difference in the 
number of pounds of butter fat paid for by the 
buyers, according to his weights and tests, and the 
number of pounds clainuHl to be received by- the 
manufacturer, according to tlu» weiglits and tests of 
their chemist. 



t -> . / 



->\' •'. ^', 



56 

RELATION OF SHORTAGE TO STATION 

BUYING AND CHURN OVER RUN. 

83. Since the churn over run is affected to a 
greater or less extent by the accurate or inaccurate 
weighing and testing of cream at both the station 
and at the factory, and in view of the custom of 
charging the buyer with any shortage over 1 per 
cent as shown by the manufacturer's weights and 
tests, there is a constant cross fire of opinion going 
from one end of the line to the other, buyers have 
been known to receive sharp letters in the latter 
months of the year in reference to shortage, when 
their station showed several hundred pounds over 
run for the previous months of the year. 

84. The custom among centralized creameries 
operating on the station system, is to play for an 



57 



average, which is less than ono-half of 1 per cent 
shortage on the total year's business. Some buyers 
have an actual shortage, especially those who are 
quite aggressive, but unpopular so to speak, while 
the buyer who stands well in his community and is 

able to buy his share of the cream on his mei'its or 
popularity, usually is made to make up the difference 

or shortage that the unpopular buyers may show a1 
some other point. 

85. The above must be seen, is unfair to the pro- 
ducer who delivers his cream in absolute confidence 
to a buyer having the goodjvvill and respect of busi- 
ness men and farmers as well, one who may be, in 
fact, the sole of honor, but through constant nagging 
is forced to take some heed of the numerous letters, 
calling his attention to supposed shortage, when, as 
a matter of fact, there is no shortage, which is proven 
by the churn over run obtained by centralized 
creameries. 



58 

PERCENTAGE TABLE OF BUTTER FAT 
BOUGHT. 

86. In the table below is shown the percentage of 

butter fat bought in the several months of the year. 
This may be considered as the amounts produced 
also. 



5 per cent July 

ugust 
September 
r cent October 
per cenV^^^-JS^ovember 




17 per cent 

11 per cent 

9 per cent 

6 per cent 

4 per cent 



17 per cent December 4 1-2 per cent 



59 



COLD STORAGE AS A PRICE LEVELER AS 
APPLIED TO STORING BUTTER. 

87. The percentage table above represents more 

tlian appears on the surface. A glance at the line 
drawn from May and June at tlie lower left, to July, 
August and September at the upper right indicates 
the LOW STATION or BUYING PRICE PERIOD, 

88. The figures 12, (representing the months of 
the year) divided into 100 per cent, which is the 
total YEARLY BUTTER PRODUCED, shows, you 
will observe that the monthly consumption is 8 1-3 
per cent. 

89. We will now refer to the percentage table, 
and find that from May 1 to September 30, there is 
an EXCESS PRODUCED over the amount CON- 
SUMED of 23 1-3 per cent or about one-fourth of the 
total. This represents the BUTTER STORED. 

90. Now refer- to the line drawn from January, 
February, March and April on the upper left, to 
October, November and December on the lower right 



60 



(represehting the HIGH BUYING and SELLING 
MONTHS). 

91. In the above SEVEN MONTHS the PRO- 
DUCTION is 23 1-3 per cent LESS than the CON- 
SUMPTION, and during this time STORAGE BUT- 
TER is SOLD, at an AVERAGE PRICE of near 32 
cents per pound, or 10 cents per pound ABOVE the 
BUYING PRICE. 

92. The farmer having a total of 1,000 pounds of 
butter fat during the year, sells 65 per cent, or 650 
pounds of it for near 22 cents per pound, receiving 
$143. 

93. He sells the remaining 35 per cent, or 350 
pounds, for near 32 cents per pound, receiving $112, 
a total of $255. 

94. The manufacturer pays the farmer $255 for 
1,000 pounds of butter fat. 

95. From this 1,000 pounds of butter fat he makes 
1,240 pounds of butter. 



61 
y(i. FIFTY-EIGHT PER CENT oT tliis huttci- or 
719 i)ouiuls is sold between OetolKn- 1 and Ai)nl :jO. 
for } cent under tlie uuirkets, wliieli is figured at 3 
cents above tlie price paid to the farmer at tluvt time, 
or 35 cents per pound, making the selling price 34 

cents per pound, and the amount received <i;244.46. 
97. The remaining 42 per cent, or 521 pounds is 

sold between May 1 and September 30. Inuring this 
time the market is found 4 cents above the station 
buying price, making the selling price 25 cents and 
shoM^ing a value of $130.25. 
Total selling price, $347.71. 



62 



ys. Avonige sclliiij? i)i-ice of 1,000 pounds of Init- 
U'l- fat bought from tlie farnu^r, 37 cents pw i)Ound. 

!)9. Average i)rice paid the farmer foi- 1,000 
pounds of butter fat, 25 cents per pound. 

100. Dilt'erence in the buying and selling pi-ice, 
12 cents per pound. 



63 

UNREASONABLE PROFITS. 

101. At this point of the proceedings the retail 
merchant takes charge of tlie butter, and receives 
about 5 cents per pound foi" his retail profit, this 
when added to the toll already taken, shows a net 
difference in the price received by the producer, and 
the price paid by the consumer, to be 17c per pound. 

102. It shows that when the producer receives 
$255 for cream, that it costs $170 to deliver it to the 

consumer in the form of butter. 

103. It shows that when the producer delivers a 
10 gallon can of cream to a station, that he receives 

an average of $6.22 while the butter made from the 

same cream sells to the consumer for $10.36. 



64 



104. It shows tlmt when the producer delivers a 
10 gallon can of cream to a station, the cost of buy- 
ing, transporting, majuifactnring, storing and selling 

is $4.14. 

105. It shows that the producer selling cream on 
the station buying system, pays 66 per cent of the 
price paid him for his butter fat, to the station 
buyer, transportation company, manufacturer, specu- 
lator and retail merchant. 

106. It shows that for each $1.00 received by the 
producer for cream, someone else gets 66 cents. 

107. The producer should have no difficulty in 
locating the PRICE LEVELING process of COLD 
STORAGE as applied to the CREAMERY BUSL 
NESS. 

PRODUCTION AND CARE OF CREAM. 

108. Under the present conditions there is but 
little incentive for the producer to deliver FIRST 
GRADE CREAM as he receives no higher price for 
it than is paid for second or third grades. 



65 



101). One producer may have better facilities than 
another for taking care of cream after separation, 
but it is witliin tlie means of all to pi'ovide a suitable 
place, at little or no expense, where it may be k<!pt in 
proper condition. 

110. There is a distinction made in the pi'ice of 
horses, cattle hogs, wheat, oats and coi-n, in fact 
everything the farmer sells, or has for sale, except 
cream (which is cream) and paid for as such, 
whether it is good, bad or really unfit for the making 
of butter. 

111. Thoroughly experienced men are able to 
grade cream accurately, yet the attempt to do so 
with complete satisfaction to all producers is an 
extremely difficult task, and sinci' it is found so 
difficult there is but one thing to do — every producer 
should take it upon himself to deliver FIRST 
GRADE CREAM whether his neighbor does or not. 

112. With the above thought in mind, the aver- 
age grade of butter may be increased to a marked 
degree. 



66 



Vo. We take the liberty hero 6f suggesting that 
before each milking, the cow's udder be waslunl Ihor- 
oughly, and as the liands are waslied before eacli 
meal, so they should be before milking, as absolute 
cleanliness is imperative in i)roducing first grade 
cream, and making No. 1 butter. 

114. The bowl and tinware of separators should 
never stand from one milking to another without 
washing. 

115. The practice of running both the night's and 
morning's milk through a machine and washing it 
after the second run, produces No. 2 or No. 3 grade 
cream. 

116. High test cream remains in better condi- 
tion for a greater length of time, and the express 
charges are less, than on low test cream. 

117. Never mix warm cream Avitli cold, the warm 
cream should be cooled as quickly as possible after 
separation, then when mixing the two together, STIR 
IT WELL. 



67 



nS. Cream by all iiicaiis sliould be kept eool 
while it I'lMiiaiiis on the farm. 

11!). A wet l)1aiiket sliouhl be thi-owii ovci- the 
ran wliile it is Ix'iiit; dclivci-ed to the depot. 

120. The i)r()(lueers KP]WAK1) for earryiu^ out 
the few sng^estions above, is the satisfaction that 
eonn'S with the knowledge that he is doing his part 
towards making it i)ossible to make a better grade of 
butter, and as a result he niay expect a better price 
for liis cream. 
CREAM TESTING INSTRUCTIONS FOR THE 

FARMER. 

First. The cream .to be testetl nuist be stii'red 
until contents of the can is uniform. 

Second. Aftei- stirring the cream (not a minute 
after) but inunediately, take out one-half pint as a 
sample. 

Third. In cold Aveather the sample should bo 
Avarmod, and also the sulphuric acid .to be used. .■ , 

Fourth. Stir tlie sample well, then di-aw the 
cii-eam into the pipette with the mouth, until it is 



68 



levc'. with llu- mark above tlie bulb, blow the ereaiii 

iuto the test bottle, rinse the pipette with warm 

water and add this to the cream already in the test 

bottle. 

Fiftli. The same amount of sulphuric acid is then 

adi'(> ! to the cream, Avith the test bottle at an angle 

of 1") degrees, letting the acid run down the side of 

the bottle instead of through the cream. A rotary 

motion of the test bottle will mix the cream and acid 

without boiling over. The mixture should be a dark 
brown color. The bottle should always be held away 
Irom the face when adding- the acid to tlie cream. 

8ixth. Set test bottle in the lestei-, with another 
bottle on the oi)iiosite side as a balance. Turn tester 
for 4 minutes. Then add warm water to bring the 
butter fat up into the neck or graduation of the test 
bottle, then turn it two minutes more. 

Seventh. A curvature will be found at the top of 
the fat column, the test is read from the dark line of 
this curvature to the extreme bottom of the butter 
fat. 



69 



Note the example below : 

Pounds of cream 79 

Multiply by the test 32 

158 
237 

Pounds of butter fat, (25 2-10) 25.2- 

Price of butter fat 25c 

1260 
504 

Amount $6.30 

Use the Wagner, or Nafiis, 50% straight reading 
test bottles, graduated to V2%'» aiit^ a 9 ec. pipette. 

The law requires a buyer of cream to weigh the 
charge of cream being tested, but the metliod above 
given is sufficiently accurate for use on the farm, 
tests made of a thin density of cream will be prac- 
tically correct, while the reading of a heavy density 



70 

eream will ho slighly less than would show if the 
charge l)e weighed, ])iit ))>• tlie use of a pipette you 
ai'e relieved of tlu^ expense of buying a scale. 

Complete testing outfits may be bought from the 
d'eamery Package ^Manufacturing Co., of Omaha, 
and Chicago, and I'auge in pi'ice from >fi8.r>0 to !|>4.r)0. 

In oi'dering testing outfits you should include the 
following : 

One 2 bottle tester. 

One 9 cc. pipette. 
One J) ec acid measure. 
Two ;")()% cream test bottlers. 
One whole milk bottle. 
One skim milk bottle. 
One pint of sulphuric acid. 



71 

TESTING WHOLE MILK. 

Whole milk is tested in the same manner as cream, 

except that the test bottle used is smaller in the neck, 

and is graduated to 10%, twice the charge o/wea«^ 

is used, and also twice the amount of sulphuric acid. 
TESTING SEPARATED MILK. 

Skim milk is tested in a special skim milk bottle 
wliicli has a double neck, and is graduated to 10-100 
of 1%. The charge of milk to be tested is put into 
the bottle through the larger opening, anrl the fat 
contained in the milk is found in the smaller opening 
when the test is completed. 

Greater care must be used in testing skim milk 
than either creaui, or whole milk, the process is the 
same as that used in testing whole milk. 



72 

Keep Separator in Perfect Order. 

The ordinary cream separator will skim to within 
;3-100 of 1%. Should it run over that amount you are 
loosing too much butter fat. The separator needs 
attention. 

Dispose of the Unprofitable Cow. 

Cows giving milk testing under 3yo% per cent are 

not profitable, they should be weeded out as quickly 

as i)ossible. The volume of milk given, of course, 

must be taken into consideration. 

Whether you sell cream at a station, make it into 

butter on tlie farm, or ship it direct, the ownership 

of a snmll hand tester is by all means one of the 

principle necessities to successful dairying. 



73 



CONDENSED COMMENTS ON IMPORTANT 

PARAGRAPHS, REFERRED TO BY 

PARAGRAPH NUMBER. 

No. 3. It is seen that the local country creamery- 
man unsuspectingly turned over his business to the 
centralized creamery, finding himself unable later to 
rectify his mistake, thus causing his almost complete 
elimination for many years. 

No, 8. No reflection is intended as to the good in- 
tentions of field superintendents, only when their 
expense to the buyer is considered, together with 
others of a similar nature, is the system represented 
requiring such expeiise found impractical, and un- 
able to stand the test of time. 

No. 15-17. Playing for an average buying cost, in 
no way justifies the visible injustice to the buyer, 
who through lack of knowledge accepts lower com- 
missions than others buying for the same company, 
or to the producer who may unfortunately live out- 
side of the troubled territory. 



74 



No. 19. Consider this paragraph thoroughly now, 
and again after committing to memory paragraph 48. 

No. 32. If the buyer's commission is lMi% per 
pound of butter fat delivered at depot, the cost to 
the manufacturer when figured on the basis of the 
butter made, is less than (1 2-10) one and two tenths 
cents. 

No. 33. Is the cash station system worthy of your 
patronage ? 

No. 40. Your neighbor Smith may res;emble you, 

l)ut a close inspection will show some difference. 

No. 48. Why is the price of butterfat near 22 
cents at tliis time? I>ecause 65% of all you jn'oduce 
is being bought. 

No. 50. Why is the price of butter fat near 32 
cents at this time? Because only 20% of all you pro- 
duce is being bought, and 43 1-3% is being sold. 

No. 57-59. Add the margin of 4 cents per pound 
of butter fat, to the value of the churn over run, then 
have your boy figure it over to see that no mistake 
is made. 



75 



No. 71, If this don't suit you, dou't hlainc tlie 
otlicr folloAV, you liave a remedy. 

No. 72-81. The buying cost of butter fat uuiy 
have some bearing on tlie ])riee you receive. 

No. 82-8;"). There are two kinds of buyers. One 
ships the manufacturer more butter fat than he pays 
for, while the other ships less. 

No. 86. Knowing this percentage table by heart, 
means dollai's to you. 

No. 101. A microscope has no [)lace here, it looks 
too large even >vith the naked eye. 

Nos. 104-107. That none of this may escape your 

attention, better talk it over yith your wife. 

Nos. 108-120. AVheu you manufacture butter ui 
addition to produce the crinim, it should all be No. 1 
grade. 

No. 105. Kefer to No. 101— then to No. 135— and 
again to No. 101. 



76 



THE ONLY PROFITABLE 

AND 
ECONOMICAL SYSTEM 

OF 

MARKETING CREAM. 

Ample evidence lias already been presented to 
show the intelligent farmer that the cash station sys- 
tem is fai" too expensive to be longer considered as 

a profitaliie method of ^r.arketing cream, even if 
! aiidled in f e most economical way. 

The <jUolity of cream is affected by standing in a 
•v.'anu stalio-i, sometimes for clays. 

The manufacturing cost is reduced by churning in 
large quantities, on this point there is no question, 
but no one can successfully dispute that the farmer 
by shipping it himself, not only eliminates the ex- 
pense found in the station system, but the cream 
reaches the creamery in far better condition. 



77 



DIRECT FROM FARM TO CREAMERY. 

Since the direct from farm to creamery method is 
found the QUICKEST, CHEAPEST and MOST 
PROFITABLE, and the necessitv for churniuj? in 
large quantities is adinitted, in oi-der that the maini- 
facturing cost may be reduced to the lowest possible 
figure, the question arises, who manufactures the 
butter at this time, and who should do it ? 



78 

DO IT YOURSELF, BROTHER. . 

There is too many standing between you and the 
jx'ople wlio consume the l)utter made from your 
cream. 

Profit tiiat is rightfully yours,, now goes to others 
who ai-e not content with reasonable returns on their 
investment. 

Their DEEP affection for you is too closely as- 
vsociated with the 17 cents they receive from each 
pound of butterfat you sell. 

Bear in nund that butterfat is produced by the 
millions of pounds; Sioux City creameries manu- 
factured about 14,()()(),0()0 })ounds in the year 1915. 
while Omaha creameries nuide 25,00(),()()() pounds in 
Ihe same year, hauling no less than 6,000,000 pounds 
of this from the states of South Dakota, Minnesota 
and northwestern Iowa, on which the express charge 
will average 2^4 cents per pound on the butterfat. 



79 



Don't lose siglit of the injustice to producers who 
sell their ei-eain at stations, wliere the prices paid are 
higher in one state than they are in another, while 
the cream goes to the same creamery, WHO REGU- 
LATE THE PAYING PRICES, and make it into but- 
ter in the same churn. 

Developed and applied thought is responsible for 
all that we have, mere thought avail us nothing. 

The business of this country is being done on a 
large scale, and is being centralized more and more 
as time passes. 

Tlie j)acking house industry is a striking illustra- 
tion of combined capital and brains. Init is no more 
so than may be said of many other lines that affect 
you and the consumer. 

Control of the raw material makes this possible, 
the centralized creameries, like other large indus- 
tries, is a good thing (or a bad thing), depending 
on who owns and controls them. 



80 



The fjii-iiK r lins llic raw luatcrial and is therefore 
.supreme (unless he turns it over to those who have 
but litth^ interest in either him or the eonsumer). 

Having: the cream he should manufacture and sell 
the butter. "Why not?" The expense of doing so is 
a mere trifle when compared with the resulting ben- 
( iits, especially on the centralized plan. 

If you have carefully examined the evidence here- 
in, -with particular attention given to paragraphs No. 
101 and No. Ifl5, the dictates of your own good judg- 
ment can give but one answer (AND YOUR DE- 
CISION SHOULD BE MADE NOW). 



